Mirvac has offloaded a 17-storey office building in Brisbane to Melbourne-based property fund manager Forza Capital for $86.75 million in one of the first institutional grade office deals to take place in the city since COVID-19 struck.
The building, which is in Brisbane’s ‘Golden Triangle’ at 340 Adelaide Street, had undergone an extensive refurbishment by Mirvac and sold at an 11 per cent premium to its last book valuation in June.
The property, which is 93 per cent leased to tenants such as Oracle, Cover-more Insurance and the Attorney General’s Office, has a 3.8 year weighted average lease expiry.
Brett Draffen, chief investment officer at Mirvac, said proceeds from the sale would be redeployed to grow its asset creation business and would allow the group to “capitalise on opportunities to create Australia’s next generation of workplaces, residential communities and mixed-use precincts”.
The office tower is the first asset to be acquired by Forza Capital following a $240 million capital raising from its client base of family offices and high net worth advisory groups in September and will sit in the newly established Forza 340 Adelaide Street Fund.
Forza Capital director Adam Murchie said they had advised their investor base to be prepared for opportunistic property investments shortly after COVID-19 had struck.
“Speed to transact was anticipated to be critical and we believed getting early capital commitments and being able to transact quickly would be paramount to securing new investments on attractive metrics.”
Forza Capital director Ashley Wain said the uncertainty in the office market had created attractive investment metrics.
“When combined with highly competitive debt funding [the metrics] result in a target eight per cent per annum distribution yield over the first five years of the investment.”
The deal was negotiated by CBRE’s Flint Davidson, Tom Phipps and Bruce Baker, and Matt Lawrence arranging the debt.
“As the first major, post-COVID capital markets transaction in the Brisbane CBD, this deal highlights the demand from onshore investors for quality office assets,” Mr Phipps said.
“As travel restrictions ease we expect the market to awaken in the first half of next year fuelled by historically low financing costs and Brisbane’s attractive yield spread.”
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